Immediate annuities: The layperson's insurance

Aug 03, 2011

An immediate annuity is a single payment to an insurer, and can be used as a life insurance policy.

Recent stock declines have produced a sense of volatility that has done everything except incite a sense of security in individuals' personal investments. And despite the importance, there are those that shy away from annuities, which connote harsh fees or hidden exceptions guarded by representatives who don't deliver personalized service. There may be reason to consider immediate annuities, though.

Unlike deferred annuities, immediate annuities are lump-sum payments to an insurer upon death or retirement, depending on how one uses it. It then shifts to regular income for the rest of the beneficiary or retiree's life.

Saving for retirement or after death traditionally requires a tireless managerial focus on risk, rates of return and fees, and that's the last thing most of the demographic feels like paying attention to.

"You need to shift your thinking and focus on generating reliable lifetime retirement income, which is the goal of immediate annuities," according to CBS Money Watch.

Immediate annuities, by nature, cater to the specific needs of the user, and are incidentally classified as a "mirror image of a life insurance policy" by CNN Money. Seeking a life insurance quote is a helpful approach to planning for a future that can be as simple as one start-up payment to a local agency.

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